Not America's sweethearts

A century ago, in the age of silent films, Mary Pickford was celebrated as “America’s Sweetheart.” Among the films she starred in were Rebecca of Sunnybrook Farm, Pollyanna, and Little Lord Fauntleroy.

In the tony resort town of Rancho Mirage, near Palm Desert, is a company supposedly devoted to showering laurels on Mary Pickford, greatly through documentaries produced by Elizabeth Coldicutt and her husband, Thomas D. Coldicutt, Jr. The company is named White Castle Productions. Its latest effort was the movie Mary Pickford: The Muse of the Movies.

But the United States government believes that Elizabeth Coldicutt is anything but a sunny Rebecca, and Thomas Coldicutt is hardly Little Lord Fauntleroy. In August of last year, the Securities and Exchange Commission charged that the pair — with help from San Diegans — raked in $5 million by creating and ultimately selling 15 so-called mining companies that were never intended to do any mining.

The idea, says the securities agency, was to set up these sham companies as corporate shells, which are corporations without active business operations or significant assets. Shells are not illegal as such; many a small company will initially sell its stock to the public by merging with a shell, rather than baring its soul in an offering that requires the filing of detailed information with the Securities and Exchange Commission. This is called a “reverse merger,” or going public through the back door. That’s one reason why empty shells can be sold for a fancy price.

The securities commission charges that the Coldicutts set up nominee officers and directors in sham mining companies they surreptitiously funded and secretly controlled. Previously, the commission had permanently banned them from such activity. A nominee is a person or group in whose name a security is registered, although ownership is held by another party. Information filed with the agency contained misrepresentations or omissions about the companies’ purported intention to pursue mining, says the agency.

Three San Diegans assisted in the alleged ruse, says the securities commission. Attorney Robert C. Weaver Jr., a longtime friend of Tom Coldicutt, knowingly made misleading filings for the Coldicutt scheme, says the agency. Christopher Greenwood, Elizabeth Coldicutt’s son by a prior marriage and formerly a San Diegan, did bookkeeping for the Coldicutt companies. Susana Gomez of Chula Vista provided more than 200 Tijuana nominee investors for 12 separate Coldicutt shells, says the government.

Initially, the Coldicutts took the Fifth Amendment, but ultimately waived the privilege. Last October, Texas-based attorney John Courtade denied the major charges on behalf of the defendants. (I tried to reach them, but Courtade wants to do all the talking.) “Nothing supports the [securities commission’s] contentions that these [companies] are shams,” says Courtade. “The Coldicutts never formed any of these companies. Relatives, friends, and friends of friends in an extended network formed them. Everyone knew that they were taking a gamble on finding precious metals.”

In short, the people who supposedly had part ownership of the so-called mining enterprises were not nominees; they were actual investors, asserts Courtade, admitting that in some cases the Coldicutts made loans so their friends could capitalize the companies.

White Castle, the film company that glorifies Mary Pickford, is “a conduit through which Elizabeth Coldicutt provided money” to the alleged nominees, directors, and shareholders, says the securities agency. Courtade denies that.

Mary Pickford brilliantly projected an air of childlike innocence. The Coldicutts and Weaver, in particular, have difficulty doing the same, as records of the securities agency, the Financial Industry Regulatory Authority, and National Association of Securities Dealers indicate.

Thomas Coldicutt was a branch manager of a brokerage in the untamed markets in Vancouver. The Vancouver Stock Exchange — known for shams and swindles — suspended Thomas Coldicutt for five years for permitting unregistered brokers to deal with clients. (The exchange has been merged out of existence.)

The Coldicutts went on to Burnett Grey, a firm with a San Diego office and a dubious reputation. On separate occasions, both Thomas and Elizabeth were censured and fined by the National Association of Securities Dealers for violations of broker-dealer rules.

“Through their work at Burnett Grey [and another firm], the Coldicutts became involved in marketing and trading unregistered stock of a sham corporation,” says the securities agency. Elizabeth Coldicutt was president of Burnett Grey. In 1992, the U.S. Court for the Southern District of California permanently enjoined the Coldicutts from further market manipulation schemes. In 1998, Elizabeth Coldicutt appealed, saying, among other things, that the decision had caused her “great personal anxiety and distress.” Besides, she told the appellate court, she was no longer in the securities industry and was now a documentary filmmaker.

The appellate court refused her plea. She blames her problem on an attorney whom she successfully sued for malpractice, says Courtade.

Weaver, a Western State University (now Thomas Jefferson School of Law) grad, got to know Thomas Coldicutt in the early 1990s when he did work for Burnett Grey. Weaver’s most questionable involvement was with the raucous brokerage house of La Jolla Capital. Weaver was executive vice president, secretary, treasurer, board member, and 30 percent owner of this fast-buck operation. In 1996, the business conduct committee of the National Association of Securities Dealers charged that the firm, including Weaver, had violated penny stock rules.

The association’s adjudicatory council nailed three members of the firm but let Weaver off, saying that although he attended management meetings, he had no supervisory responsibility over penny stock sales. Through Courtade, Weaver says he sold his stock, resigned all positions, and completely separated himself from the firm in 1997. Good thing. In 1999, the California Department of Corporations wanted the firm shut down. A court-appointed monitor said the books were cooked. When it was shuttered, investors got 2.5 cents on the dollar. The head of the firm, Harold Bailey (B.J.) Gallison II, went to prison.

The Coldicutt case is being heard in Texas. There will be a status conference in February. Courtade wants the case moved to federal court in Los Angeles. ■

Jeff: I have no use for shells or for going public through the back door. In my nearly 50 years in the business, I have seldom seen an operation peddling shells, or companies going public by merging with shells, being legitimate. Almost all this activity is penny stock garbage. Another thing I dislike is the company going public without giving basic information about itself. Best, Don Bauder

Really fascinating article. Great reporting. I grew up with Weaver, and knew the entire gang at La Jolla Capital. Their reckless disregard for ethics and compulsive greed was staggering. At the time, I knew nothing about stocks and got sucked in by the charming sociopaths. I thought they were "fun" and "hip" and sadly, my friends. At that time, anyone could make money in the stock market. Except me, because I let them be my stockbrokers. Found out later how they manipulated stock by having their traders buy it all up, driving the price up, so they could show their customers: "See, see how this sexy stock is skyrocketing?" Poor ol' folks would buy it at the top and then they would start dumping it. Yes, they had blatant disregard for even researching the companies they were representing. They took me about three times, for about twenty-grand all told. And the sad thing is: they are perennial crooks...it's like it's in their blood...they get off on it. I knew they were still hanging together and were setting up shady operations, now I know what they are...I remember how they used to laugh at your articles with such "devil may care" lassitude. I'm glad you brought them down then, and glad you are still now. thanks Don.

maria52: Yes, I followed those crooks beginning in the 1990s -- and maybe the 1980s -- while I was the U-T columnist. I have done more with the Reader, long after the place was shut down. It's a shame that only a handful went to prison. The penny stock game is a thieves' haven. La Jolla Capital (later renamed) was manipulating stocks with impunity. Industry self-regulation was a joke. It has improved somewhat, but still protects the crooks, just as the SEC does. Best, Don Bauder

yep, that is for sure. the sec still protecting crooks. my poor ma living the life in la jolla has tragically kept the same broker from some fancy house in La Jolla/UTC area. Her fortune went from 2 milion in 2000, to 700,000 in 2002, to 130,000 in 2005 and now is a paltry 30,000. all stocks her broker concomitant dear friend, halloran, has hand picked himself. way to churn and burn, buddy. how could a broker lose an old lady that amount of money when the stock market is almost to levels of 2000? can you explain that to me? is he a crook, or just well-meaning albeit wrong all the time? inquiring minds want to know. perhaps you could shed some light?

yeah, i know it's below, but not to the extent my mother has lost with her "gentleman" stockbroker friend. anyhow, i really enjoyed your article, liked the superb investigative work. and how wild is that? using mary pickford as a ruse. that's just, just, well, obscene!

maria52: She was a real ingenue; she looked so sweet. Actually, her personal life was a little rocky, but there is nothing unusual about that in Hollywood, even the original Hollywood. Best, Don Bauder

naturalbornwriter: You should never, ever give your money directly to a so-called money manager. If you want someone to manage your money, the money should be in a bank or some other financial institution. The manager can only make moves by going through the bank. If you give it directly to the manager, you have no idea whether it will be invested or stolen. Best, Don Bauder